{"id":1647625,"date":"2023-03-17T10:33:57","date_gmt":"2023-03-17T15:33:57","guid":{"rendered":"https:\/\/thebudgetfashionista.com\/?p=1647625"},"modified":"2025-10-21T12:41:53","modified_gmt":"2025-10-21T18:41:53","slug":"how-to-prep-for-recession","status":"publish","type":"post","link":"https:\/\/www.thebudgetfashionista.com\/fashion-trends\/how-to-prep-for-recession\/","title":{"rendered":"How to prep for a recession: 7 magic money moves"},"content":{"rendered":"\n

Disclosure: <\/em>This post contains links to Honest Policy\r\n \r\n \r\n \r\n <\/g>\r\n \r\n \r\n \r\n <\/clipPath>\r\n <\/defs><\/svg><\/span><\/a>, an insurance quoting service and learning resource. I am a paid writer for Honest Policy. I’m including their links here because I truly believe in the company’s mission statement — which is anchored on bringing integrity<\/use><\/svg><\/span><\/a> into the convoluted business of insurance.<\/p>\n\n\n\n

After more than a year of super-high prices and a weak stock market, the bad economic news keeps coming. In March, three U.S. banks collapsed in the same week — raising the chances of an economic downturn later this year.<\/p>\n\n\n\n

If there’s ever a time to learn how to prep for a recession, it’s right now.<\/p>\n\n\n\n

Recession hits the average household hardest with job loss. A recession, technically, is an economic contraction. The country as a whole lowers its output of goods and services. That reduction goes hand on hand with higher unemployment since lower output requires fewer workers.<\/p>\n\n\n

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Recession hits the average household hardest with job loss. Source: Envato.<\/figcaption><\/figure>\n<\/div>\n\n\n

When you prep for a recession, then, you are essentially building your financial resilience — so you can manage through a temporary income loss. If you like the way that sounds, implement the eight magic money moves<\/a> below.<\/p>\n\n\n\n

1. Build your cash savings  <\/h2>\n\n\n\n

You know the drill. You need a cash emergency fund. Those cash reserves keep you from turning to credit cards if you lose your job.<\/p>\n\n\n\n

You should target a cash savings balance that will cover at least three months of your living expenses. That’s probably 25% of your annual income. Admittedly, saving up that much is no small task. If you’re starting from zero and saving 5% of your paycheck, it takes five years to reach the 25% target.<\/p>\n\n\n\n

Don’t be discouraged by that timeline. Having a small cash balance on hand is better than having nothing. Plus, there will surely be more recessions later, so your efforts won’t be wasted.<\/p>\n\n\n\n

As a backup plan, you can investigate low-cost sources of debt paydown, such as your rich<\/a> aunt or a home equity line of credit. Turn to those if your finances go south before you can get your cash savings in order.<\/p>\n\n\n\n

2. Lower your living expenses<\/h2>\n\n\n\n

Cutting back your living expenses now will lessen your dependence on that cash emergency fund. Remember that if you get laid off, you should qualify for unemployment income. Lower your expenses by enough to survive on unemployment alone and the cash on hand becomes less important.  <\/p>\n\n\n\n

Whether that’s a realistic goal depends on where you live and the composition of your living expenses. For context, maximum weekly unemployment benefits<\/use><\/svg><\/span><\/a> range from $275 weekly in Alabama and Florida to $1,015 in Massachusetts.<\/p>\n\n\n\n

How to cut your living expenses<\/h3>\n\n\n\n

Household spending categories that have the largest savings potential<\/a> include food, insurance, and discretionary services like high-priced salon visits. Rent may also be an opportunity, if you don’t own your home and you don’t mind moving.<\/p>\n\n\n\n